DP18671 Is Religion an Inferior Good? Evidence from Fluctuations in Housing Wealth
An increase in local house prices in the US is associated with a decline in time spent on religious activities for homeowners relative to renters. This effect is not present for volunteering and civic activities. The decline in religious activities is stronger for credit constrained households. The main result is driven by a wealth effect, whereby activities that have an inferior-good component decline with housing wealth, and by a substitution effect whereby the attractiveness of activities linked to the residential asset increases during housing booms.